Location: Kansas City, MO | Metro: Kansas City, MO-KS HUD Metro FMR Area
Based on 1% Rule: A+ (≥1.5%) | A (≥1.2%) | B (≥1.0%) | C (≥0.8%) | D (≥0.6%) | F (<0.6%)
| Unit Size | Monthly FMR |
|---|---|
| Studio | $1,090 |
| 1 Bedroom | $1,180 |
| 2 Bedrooms | $1,340 |
| 3 Bedrooms | $1,750 |
| 4 Bedrooms | $2,100 |
| 5 Bedrooms | $2,436 |
| 6 Bedrooms | $2,728 |
| 7 Bedrooms | $2,946 |
| 8 Bedrooms | $3,093 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $1,340 | $125,354 | 1.07% | B |
| 3BR | $1,750 | $164,208 | 1.07% | B |
| 4BR | $2,100 | $195,686 | 1.07% | B |
U.S. Census Bureau data (2024)
The Section 8 cap rate analysis for ZIP code 64129 in Kansas City, MO, reveals interesting insights into potential investment opportunities. The Fair Market Rent (FMR) for a 2-bedroom apartment in fiscal year 2024 is set at $1090 per month. When annualized, this translates to an effective gross yield of approximately 8.7% based on the median home value of $151,320. This calculation is derived by multiplying the monthly rent ($1090) by 12 months and dividing by the median home value.
In contrast, the Zillow Observed Rent Index (ZORI) indicates a market rent of $1,446 per month for a similar 2-bedroom unit. Annualizing this figure results in a higher gross yield of about 11.5%. This calculation follows the same logic: multiplying the market rent by 12 months and dividing by the median home value.
The implied gross yields of 8.7% and 11.5% provide a clear comparison between the two scenarios. Given that the renter density in ZIP 64129 is 42.8%, it suggests a moderate demand for rental properties, making the ZORI-based yield more realistic for most investors. However, the lack of data on days on market (DOM) means we cannot accurately gauge the speed at which properties are rented out, which could affect cash flow and vacancy rates.
Investors should consider the FMR yield as a conservative baseline for government-subsidized rentals, while the ZORI yield represents a more optimistic scenario for market-rate rentals. Both yields are above average for the area, indicating strong potential returns. Nonetheless, the actual net operating income (NOI) will depend on individual property conditions, management costs, and the specific terms of any Section 8 contracts.
To summarize, the annualized 2BR FMR of $1090 provides a gross yield of 8.7%, whereas the ZORI market rent of $1,446 offers a gross yield of 11.5%. The higher market rent yield aligns better with the observed renter density, suggesting it is more likely to be achieved in practice. However, investors must also account for the specifics of the local rental market and the particularities of Section 8 programs when finalizing their investment decisions.
Data Sources: FMR data from HUD (2027). Median home prices from Zillow (2026-08-31). Demographics from U.S. Census (2024).
About FMR: Fair Market Rent (FMR) is used to determine payment standards for the Section 8 Housing Choice Voucher program, initial renewal rents for some expiring project-based Section 8 contracts, and rent ceilings for HOME Investment Partnerships.